A packed house of labor and non-profit activists crammed into the SF Public Library’s Koret Auditorium yesterday to hold a “Budget and Revenue Town Hall” on the Mayor’s proposed cuts. Many of these groups have to fight such battles every year, but this year – with $20 million in cuts that would affect 150 community-based groups – it’s particularly brutal. Much of this is due to trickle-down cuts from the state level, as Governor Arnold Schwarzenegger has run out of creative ways to pass the buck from year to year. In the end, the overriding message was that San Francisco will need to tax itself – with two revenue measures being drafted for the November ballot. But a political strategy for making this pass is still in the works, as prior attempts have failed …

Having worked in the non-profit sector for eight years, it’s hard not to get cynical about the City’s annual round of budget cuts. Non-profits that provide front-line services for the indigent must drop everything every June and July – taking two months out of a year just to stay in business. But this year, the budget cuts are truly painful. “This is the first opportunity to have a public airing on these cuts,” said Chelsea Boillard from Coleman Advocates for Youth. “But we also want to explore some real revenue solutions.”

During the first hour, one service provider after another gave a presentation about what they do, how they save the City money, and how much they’re getting cut. The Haight-Ashbury Free Clinic could lose $3 million out of their budget – including HIV programs and the City’s only psychiatric care for jail inmates. Central City Hospitality House could lose daytime access to the two largest homeless shelters, along with the Tenderloin Homeless Resource Center. “This is the City of St. Francis,” said Jacob Moody of the Bayview Hunters Point Foundation. “And we will not let that tradition be lost.”

But it was the second half of the program where the group started analyzing how we got there, and what solutions are possible. And as much as things can be done locally, the brunt of the problem comes from the state level.

“The Governor says we have a $15 billion deficit, but times in the state are worse than ever,” said N’Tanya Lee of Coleman Advocates. “All the one-time solutions that the Governor proposed are mostly gone.” Democrats control the state legislature – but with a 2/3 requirement to pass the budget, Republicans have forced a deadlock where no tax increases see the light of day. The biggest problem was the repeal of the Vehicle License Fee that Arnold pushed in 2003, which if restored would bring back $6 billion.

While San Francisco has seen an increase in local revenue, that hasn’t made up for the disastrous revenue cuts at the state level – which the City has largely depended on over the years. The common theme? Revenue must become a central part of the state budget.

Moreover, said David Williams of SEIU Local 1021, San Francisco lost a huge amount of revenue in 2001 when the City’s business tax was repealed – something Supervisors who voted for it now admit was a mistake. “Downtown is thriving,” said Williams, “and there’s gotta be a way to tap some of that wealth and revenue to get us out of this mess.”

Supervisor Aaron Peskin has requested the City Attorney to draft two ballot measures for November aimed at raising revenue: (a) an increase in the real estate transfer tax and (b) ending the loophole in the payroll tax that exempts law firms and other business partnerships. Each measure could yield up to $40 million a year – although it could not be used until next year’s budget. There was no mention of a gross receipts tax – although Newsom himself has indicated support in the past.

But while there was optimism from yesterday’s Town Hall about long-term solutions, there hasn’t been much talk yet about making the passage of these Revenue measures a political reality. In 2002, for example, Peskin tried passing an increase in the real estate transfer tax – but it failed by 10 points after Downtown threw money at it. Measures to increase revenue are not as sexy as other progressive propositions – making it one of the more difficult measures to pass (despite it being so critical.)

And it may be even harder this November. Despite a huge progressive turnout because of the presidential election, one of SEIU’s (and the Mayor’s) top priorities will be a hospital bond to renovate San Francisco General. Supervisor Chris Daly’s affordable housing set-aside will also further complicate matters. Revenue measures to make Downtown pay their fair share are always popular with progressives, but to win a citywide election there will have to be a major grassroots effort – and that means prioritizing it above others.

But these concerns did not deter the crowd at yesterday’s gathering. “If we don’t pass these revenue measures,” said Steve Fields of the SF Human Services Network, “shame on us. You’re going to have to give time. You’re going to have to give energy. We need a budget process that is accountable to the community.”